Reliance Business Goes to Baldor

The acquisition, valued at $1.8 billion, will create a leading maker of industrial electric motors and power transmission products.

Baldor Electric Co. said this week that it has signed a definitive agreement to acquire the Reliance Electric Co. and certain of its affiliated Power Systems businesses from Rockwell Automation Inc., the Milwaukee-based industrial automation vendor. 

Baldor, based in Fort Smith, Ark., will purchase 100 percent of the equity interest in the Power Systems business for $1.8 billion, comprised of $1.75 billion in cash and approximately 1.6 million shares of Baldor common stock, with a market value of $50 million. The transaction is expected to be completed in the first quarter of 2007 and is subject to customary closing conditions and necessary regulatory approvals.  

The combined company will be one of the leading North American manufacturers of industrial electric motors and power transmission products, Baldor said. The Power Systems business, which markets its products under the Reliance Electric and Dodge brand names, complements Baldor's business in industrial electric motors, drives and generators.  

Great fit 

"The Reliance and Dodge businesses are a great fit with our existing businesses," said John McFarland, chairman and chief executive officer of Baldor. "The Power Systems business will complement and add strength to Baldor's product line. The Power Systems business, like Baldor, provides the best industrial products available in the marketplace and sells them to value-minded customers.” 

The Nov. 7 announcement of the deal comes less than five months after Rockwell Automation said it was putting the Dodge and Reliance businesses on the block, citing a desire to strengthen its investment focus on its controls business. The Dodge and Reliance businesses are headquartered in Greenville, S.C.  

Baldor cited a number of benefits and opportunities in the transaction for Baldor customers, shareholders, and the employees of both companies: 

- Adds approximately $1 billion dollars in sales with margins higher than Baldor's
- Provides a manufacturing base in China for the Asian markets
- Extends Baldor’s product line into power transmission products and larger motors
- Enables Baldor to provide a broader product offering and services to customers
- Provides strong opportunities for synergies and cost savings in the combined businesses
- Addition of the Power Systems management team increases the strength of Baldor’s management group
- Increases Baldor’s manufacturing capability and flexibility
- Broadens investor interest in Baldor

Baldor Electric Co.

Rockwell Automation Inc.

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